Definition
Tourism and leisure enterprise cities are development zones focusing on tourism, leisure, and culture, and was one of three types of enterprise cities along with industry and trade-type enterprise cities (manufacturing industries and trade-centered enterprise cities) and knowledge based enterprise cities (research and development-centered enterprise cities).
Enterprise city means a city developed by private enterprises equipped with primary functions such as industry, research, tourism, leisure, and business, and self-sufficient multi-functions such as housing, education, medical services, and culture according to Article 2 of the Special Act on the Development of Enterprise Cities.
According to the article amended on May 30 of 2015, enterprise city was not classified any longer to allow developers to be more flexible with projects.
However, the Article 30 of the permission for a casino business or support for tourism promotion and development fund that applied to the project of tourism and leisure enterprise city before the above amendment is now applicable only to the project of enterprise city that has main functions - tourism and leisure – compared to other enterprise city projects.
Designation of Enterprise City
Requirements for Designation
To be designated as a development zone of enterprise city, the development project shall satisfy all of the following requirements.
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Size | The size of a development zone shall be at least 3.3 million square meters; for tourism and leisure enterprise cities, the size shall be at least the size prescribed by Presidential Decree. |
Location | A development zone shall be available except for the metropolitan area. |
Growth Poles Development | For a development project of unused land around corporations or universities, the size of a development zone shall be reduced to 100,000㎡. |
Locality | The development project shall represent the characteristics of the region. |
Securing of the Land | Where local governments express enthusiasm in and residents show support for the development project, it shall be easier to secure the land. |
Sustainable Development | The sustainability of the development project shall be considered along with its effects on local economy. |
Source : Ministry of Land, Infrastructure and Transport (2013.10.4). The Procedures and Selection Criteria of Tourism and Leisure Enterprise City; Ministry of Land, Infrastructure and Transport (2015.12.15). Information on the Development of Tourism and Leisure Enterprise City.
Requirements for Project Operator
The criteria for the designation of a project operator under Article 10 (3) of the Special Act on the Development of Enterprise Cities shall be as follows:
A private company that has established a consortium company responsible for the execution of the relevant development project shall be satisfying at least three of the following requirements: (a) Its equity capital in the latest year shall be at least 100 billion won; (b) Its gross sales in the latest year shall be at least 500 billion won; (c) The ratio of liabilities in the latest year shall be less than 1.5 times the average of the companies in the same field of business; (d) Its business has generated operating income, ordinary income, and net income continuously for the latest three years; (e) The ratio of net income to equity capital has remained at least five percent over the latest three years, and the cash flow from business activities is positive.
Where at least two private companies establish a company exclusively responsible for the execution of a development project, the private company that has invested the most shall be ranked a legitimate investment grade (BBB) in the evaluation on corporate bonds or corporate credit rating for the latest year.
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Financial Soundness |
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Funding and Investment Plans |
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Locality / Cooperation with Local Governments |
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Source : Ministry of Land, Infrastructure and Transport (2013.10.4). The Procedures and Selection Criteria of Tourism and Leisure Enterprise City.
Enterprise Cities in Operation
As of 2015, two tourism and leisure enterprise cities and two knowledge-based enterprise cities are in operation.
Tourism and Leisure Enterprise Cities | Knowledge Based Enterprise Cities | |||
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Location | Youngam · Haenam | Taean | Wonju | Chungju |
Area | 34,817,000㎡ | 14,644,000㎡ | 5,290,000㎡ | 7,009,000㎡ |
Cost | 3,525.7 billion KRW | 1,146.2 billion KRW | 948 billion KRW | 430.8 billion KRW |
Facilities | Motor sports, golf courses, marina, meditation resort, Namdo Food Culture Village, etc. | Multi-functional complex, theme park, international business center, youth culture park, etc. | Advanced healthcare industry, health and biotechnology industry complex, science park, research facilities, etc. | Parts and materials business, convention center commercial and residential building, multi-purpose sports facilities, etc. |
Progress |
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Source : Ministry of Land, Infrastructure and Transport (2013). Progress of Tourism and Leisure Cities; Federation of Korean Industries (2013). Development Strategies for Tourism and Leisure Cities; Ministry of Culture, Sports and Tourism (2015). Korean Tourism Annual Report 2014.
Investment Incentives
According to Article 26 of the Special Act on the Development of Enterprise Cities, the State and local governments may grant the reduction of or exemption from national taxes and local taxes to enterprises poised to move into the development zones and from the rental fees for State and public property to operators or enterprises poised to move into the development zones.
According to Article 30 of the Special Act on the Development of Enterprise Cities, the Minister of Culture, Sports and Tourism shall grant permission for a casino business if it is reflected in an implementation plan for a tourism and leisure-type enterprise city, and the criteria and procedures may be separately established by Presidential Decree if a tourism business facility is sold by units or memberships are invited into a development zone.
The rate of land an operator shall directly use is changed from 50 percent to 20 percent: Provided, That when he/she is bankrupt, such rate may be reduced to 10 percent as prescribed by Presidential Decree.
the building coverage ratio or capacity is available within the scope of 150/100 at maximum
floor area ratio
The head of the metropolitan city/special self-governing city having jurisdiction over or city/county located in the development zone shall change the floor area ratio determined by its ordinance to a maximum of 150 percent.
Incentives | Related Laws | |||
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Tax Reductions or Exemptions | Where the amount of foreign investment is at least 10 million USD. | National tax1) (corporate tax / income tax) | 5 yrs. (100%/3 yrs. & 50%/2 yrs.) |
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Local tax2) (acquisition tax / property tax) | 5 yrs. (100%/3 yrs. & 50%/2 yrs.) | |||
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National tax1) (corporate tax / income tax) | 5 yrs. (50%/3 yrs. & 25%/2 yrs.) |
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Local tax2) (acquisition tax / property tax) | 5 yrs. (100%/3 yrs. & 50%/2 yrs.) | |||
Charges Reductions or Exemptions |
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Rental Fees for State and Public Property |
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Financial Support |
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Special Cases of Tourism Promotion Act |
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Living Conditions |
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Approval or Permission |
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1) Where the sum of the reduced or exempted income tax or corporate tax exceeds the sum of the following amounts, the ceiling on
the tax reduction or exemption shall be such sum:
a) 50 percent of the cumulative investments;
b) The lesser of the following:
(1) Number of workers at ordinary times in the relevant taxable year x ten million KRW;
(2) 20 percent of the cumulative investments.
2) Some local governments grant longer reduction or exemptions periods up to 15 years by their ordinance.